Correlation Between GOODTECH ASA and Relx PLC
Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and Relx PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GOODTECH ASA and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODTECH ASA A and Relx PLC ADR, you can compare the effects of market volatilities on GOODTECH ASA and Relx PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GOODTECH ASA with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and Relx PLC.
Diversification Opportunities for GOODTECH ASA and Relx PLC
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GOODTECH and Relx is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and GOODTECH ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GOODTECH ASA A are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and Relx PLC go up and down completely randomly.
Pair Corralation between GOODTECH ASA and Relx PLC
Assuming the 90 days horizon GOODTECH ASA A is expected to generate 1.87 times more return on investment than Relx PLC. However, GOODTECH ASA is 1.87 times more volatile than Relx PLC ADR. It trades about 0.16 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.19 per unit of risk. If you would invest 78.00 in GOODTECH ASA A on October 22, 2024 and sell it today you would earn a total of 9.00 from holding GOODTECH ASA A or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODTECH ASA A vs. Relx PLC ADR
Performance |
| Timeline |
| GOODTECH ASA A |
| Relx PLC ADR |
GOODTECH ASA and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODTECH ASA and Relx PLC
The main advantage of trading using opposite GOODTECH ASA and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, Relx PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Relx PLC will offset losses from the drop in Relx PLC's long position.| GOODTECH ASA vs. FAST RETAIL ADR | GOODTECH ASA vs. H2O Retailing | GOODTECH ASA vs. AIR PRODCHEMICALS | GOODTECH ASA vs. Ultra Clean Holdings |
| Relx PLC vs. Allegheny Technologies Incorporated | Relx PLC vs. PKSHA TECHNOLOGY INC | Relx PLC vs. GLG LIFE TECH | Relx PLC vs. ELMOS SEMICONDUCTOR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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